ensure that as russia enters wto, foreign competitors do not have an advantage over american businesses and finally we're elevating development alongside diplomacy and defense. poverty, disease, hunger, climate change can destabilize societies and sow the seeds for future conflicts. we need to make strategic investments today in order to meet our traditional foreign policy goals in the future. through the global health initiative, through the feed the future initiative, we're consolidating programs, increasing our partners' capacity, shifting responsibilities to host countries, and making an impact in areas of health and hunger that will be a real credit to our country going forward. as we transform development, we really have to deliver measurable results. our long-term objective must be to empower people to create and seize their own futures.

these five priorities are each crucial to american leadership and they rely on the work of some of the most capable, hardest working and bravest people i ever met. the men and women of state and usaid. working with them is one of the greatest honors i've had in public life. with so much on the line from arab world to asia pacific, we simply cannot pull back. investment in american leadership did not cause our fiscal challenges and retreating from the world will not solve them. let me end on a personal note. american leadership means a great deal to me personally. it is my job everywhere i go and after three years, 95 countries and over 700,000 miles, i know very well to land in a plane that says the united states of america on the side. people look to us to protect our allies, stand by our principles, serve as haan honest broker in making peace, to stands up to

bullies and tyrants everywhere. american leadership is not just expected, it is required. it takes more than just resolve. it takes resources. this country is an unparallel force for good in the world. we all want to make sure it stays that way. i would urge you to work with us o make this investment in the more peaceful afuture i believe will result. >> thank you, madame secretary, particularly for those last comments and i think i can express the thoughts of everyone on the committee in expressing our gratitude to you for the enormous energy you have expended and the terrific job that you have done in public diplomacy for our country and i think we've seen that in many of the photographs coming back from various parts of the world. i was particularly struck by the

one of you that was an historic moment and those and many others are the kind of things that really do makedifference. we compliment you, all of us, on that. i would like to ask you. i'm confident colleagues are tot questions with respect to specific countries. what i would like to do is sort of ask you to be broadly reflective and expand on the comments that you did just make since this isbuet and by your o the final budget that you will put before now been in there for more than three years. i wonder if you could put a little meat on the bones perhaps even more of the importance of this budget number that we deal with here.

egypt, for instance, is teetering on potential economic collapse unless the right decisions are made and that would have profound implications on every intereson. there are many parts of the world where we're simply not adequately staffed to be able t to promote american business opportunities and so forth and it seems to me that beggaring the foreign affairs budget, which as you said is about 1% of the entire budget of the united states, but which has so much -- it touches on trillions of dollars of engagement one way or another and profit and so forth. so could you -- there must be some measure of frustration and some degree. this budget is 8.5% lower than the president's request. and the president's request

clearly is reflective of his sense of those priorities and your sense of them. so would you share with the committee what you think we get for this and you particularly put this fund in there which for the north africa piece. that's part of this discussion. but what are we missing and what are we not being willing to be a little more critical about $100 been billion a year in afghanistan and economic opportunities elsewhere. >> that's a question, mr. chairman, i obviously spend a lot of time worrying about because as we try to respond to the urgent demands that are made because of changes in the world, we often find ourselves having to resources, come up with what we can so that america is present, america is a player, america is in there

trying to influence the outcomes of evepts and this past year has been unprecedented in demands that we have faced. while we deal with the humanitarian and political strategic demands, we also try to look over the horizon which is one of the reasons why the pivot to asia is so important. we need to be very clearly present in asia. it shouldn't be an either/or. there are other examples i would give you. we need to be very clear eyed about how we interact in this fast moving environment in which we find ourselves. i also firmly believe as i alluded to in my opening remarks that were it not for the work that foreign service officers and civil locally

employed staff do every day, american businesses would not be as profitable and expanding and cry eating as they are. we have these thousand economic officers. we have many other people who are there constantly trying to support american business. i just held and hosted a big conference at the state department where we called in american chambers from we coul asking them what are we doing right, what can we do better? we are in an economic competition that has profound consequences but it is primarily the work of diplomacy as our businesses are trying to open doors, they come to our embassies. they come to the state department. what do i need to know about this country? what can i do to get to the right person so my bidcan be fairly considered. we are also seeing an increase in travel to the united states.

so we have to dramatically update our presence because business travelers and tourist want to come here. we want them to come. it holds forth the possibility of greater benefits. we have to continue to counter violent extremism. we have done a good job in going after the top leadership of al qaeda including bin laden but we can't rest. al qaeda is now made of coalition with al shabab. everywhere i went from tunisia to algeria to morocco, we talked about security. we have to constantly respond not only with our intelligence community and military means if necessary, but we have to be on the ground picking up the information that can then be shared with our intelligence and military professionals and we

also put together for the first time this past year a global counterterrorism forum where we have the major players from around the world. i hosted the first meeting with turkey in september. we're setting up a senator in uae to counter violent extrem m extremism. these are parts of the role that the diplomacy and development experts at state and usaid perform every single day and we think it's important work because we do it with great pride. >> i thank you for that. i know they do it with great pride and to great effect. i think one of the things i was struck by is this is not under 150 account but under commerce account which i also serve on, but when i was in hong kong, i remember there were about three foreign commercial service folks who were complaining bitterly that they didn't have either the

place, which other countries had to convene meetings in, or the staff capacity and that we were literally missing, they said, "billions of dollars of business because we weren't as aggressive as other people in seeking it." so i think this connection is something that we really need to try to underscore to people. >> i appreciate your mentioning the commerce department. they've been our partners over the past many decades. their budget has been severely affected with the result that they are removing commercial officers. here we help to liberate libya from gadhafi and the commercial officer that could be there to help guide american investments is not going to be renewed and

throughout the world, i've had many conversations with major american corporations but also small and medium sized businesses in our country. we're trying to double exports in five years. we're close to meeting that goal. we have to keep upping the numbers so that we are always on our toes because that's where a lot of the new jobs are going to come from. as senator luger pointed out, we have a lot of people hurting in our country. although i think we're making progress, we want to accelerate that progress and we have to get into those markets overseas and it's difficult for many american companies to navigate through that without expert help. >> thank you, madame secretary. senator luger? >> madame secretary, in the budget that you presented, the leading candidates for recipient of foreign assistance are israel, afghanistan, pakistan, iraq and egypt in that order. it's a very sizable portion of

money. $3 billion for israel. 2.5 for afghanistan. 2.2 for pakistan. 2 billion for iraq. so forth. my question comes down to the fact that long ago before you had any responsibility, the united states decided to build the very largest embassy we've ever built in the world in baghdad. during many years those of us that visited that building or the general compound noted how important the security was around all of it. not only for the united states personnel but for iraqis who were working with us who try to build democracy and stability in that country. now as we have withdrawn our armed forces and as you pointed out, the diplomatic mission still remains remarkably vital and important, i ask this

question along with the side bar of afghanistan, which in this budget you presented contemplates building consulates across afghanistan, staffing them at a significant cost. from the realities of security situation in both of these, is there some possibility -- and i'm not suggesting rebuilding of the embassy but how do we finally relieve the pressures not just of withdrawal of the military people but an ongoing situation and one in which exposure of our diplomatic personnel and for that matter united states contractors who are not diplomatic personnel but are in those countries because of nation building ideas how to reconstruct an economy that might support a democracy.

you can't revitalize policy in this hearing but is there a way how we move given these circumstances and really how much building we should be doing or how do we even secure what we have? >> well, senator, you ask two very important questions. with respect to iraq, you know, the planning for what we are doing now really began several years ago in the prior administration it set the date for withdrawal. is set the date and frame work through strategic frame work agreement with our relationship with iraq and we planned to fulfill what we considered to be national expectations. we are doing everything we can to ensure the safety of our staff and our contractors in iraq. we constantly monitor on the

ground security conditions but there's never a guarantee of safety. all staff to are deployed to iraq are certainly aware of the risk. they are getting out. they are working with their counterparts in government agencies, businesses, ngos, but we are in the process of trying to right size our presence in iraq. i think we have to assume we're moving toward a more normalized relationship with iraq and that means we got to be very clear about what we can do and what we cannot do. because of our experience in iraq we're starting that process earlier in afghanistan because we do have through the end of 2014 until the nato combat troops will be out. we're trying to get ahead of the curve. your questions are absolutely the right ones.

we do want there to be secure democratic governance and progress in both iraq and afghanistan and how we allocate the responsibilities within the civilian workforce is what we're trying to determine. >> on an entirely different subject, madame secretary. yesterday the keystone pipeline company announced it was going to construct a pipeline between mid oklahoma and houston, texas. they pointed out this would not require any okay by the state department. that was a great relief to you, ma'am. at the same time it brings to the question of why the state department has been dudding the thing for three years to begin with. the usual answer is because it crosses an international boundary between canada and the

united states. nevertheless, after the state department apparently had come to a conclusion that it had been studied enough, recall a very large demonstration of citizens surrounding the white house one sunday in the latter part of last year demanding that the keystone pipeline be stopped, there were many arguments. one of these, however, was that essentially we should not be importing more oil into our country. it's a theme of those fighting climate change who feel that fossil fuels whether it be oil, natural gas or coal creates co2 and problems for our children and grandchildren. it may be a powerful argument. it was an argument that gave the president enough consternation that he recommended he go back to the state department for further review. maybe that perhaps by february 2013 you might be able to come

up with an answer. my hope is that it happens long before that but can you give us any idea of what kind of deliberation is proceeding and why there might in fact be a recommendation much sooner than that on behalf of energy needs of our country and particularly given the program of energy that the president has presented but had a conspicuus omission of what may come from our neighbor canada. >> yesterday the department received a letter from transcanada indicating their intend to submit a new application for a pipeline which crosses the u.s./canadian border and ends at steel city, nebraska. you're right that under the laws of the united states, the state department is responsible for evaluating any request for such

permits that do cross an international border. at this point i obviously cannot make any comment on a hypothetical application and permit and i do think that your concerns and the concerns of others about the pipeline both pro and con suggest that it's important that the process follow the laws and regulations because whatever the outcome it's likely to be controversial whichever way the decision is finally made. it is taking place within the context of u.s. gas and oil supplies increasing daumtically domestic and in fact we are now beginning to export domestic supplies and i believe that we have to continue to develop supplies everywhere.

that's an absolutely critical component of our energy security going i think that when you look at the request here, there were up until the very end of the process that we were engaged in, serious questions raised. most particularly from one of the states on the proposed pipeline route, other states made their own determination, but it wasn't until recently that nebraska weighed in. i think that a new application triggers a new refute process under existing regulations. we would be able to draw on the technical information that has

been compiled, but i think it's probably fair to say until we get the application and until we actually have astudy it, we won't be able to provide you information as tohe. >> next is senator mccartney. >> madam secretary lete join in thanking you for our dedicated service to our country. we appreciate you representing america throughout the world. thank you. i want to talk about the issue of human rights for a moment. you stated in the last december's osce ministerial meeting that lasting peace and stability depends just as much on meeting citizen's legitimate aspirations as military security. that is summer true with the

russian citizens in the streets demanding that the aspirations be taken seriously by the government. sortly we will be considering whether to grant them to russia as the united states looks at russia joining the world trade organization. that presents an opportunity for us to advance the aspirations of the people of russia. >> it is time and it may be controversial, but it's time we recognize that the inclusion put a spotlight on the world of the oppressive practices of the former soviet union. as we move to pntr, we would like to get your view as to how to use the opportunity. assistant secretary gordon was quoted when responding to what congress might do on pntr, on human rights he said we will see what congress demands. i would hope we can working to o the issue and welcome your

thoughts as to how to use this opportunity. >> first, let me commend you for your long work on behalf of the held sinky commission and the interest in the osce which i believe not only played an important historical role, but still has a role to play in maintaining emphasis on human rights. promoting universal human rights is one of the highest priorities for the united states around the world. we engage on behalf of human rights every day, everywhere. our other priority which we don't think is in conflict, but one of experience is promoting trade and boosting our economy. we strongly believe that voting is a vote to create american jobs. we agree that we think it's

important that we go ahead and do that. he served a very important role in the past by helping thousands ofews to emigrate from the soviet union. we ought to lift it, failing to lift it will put our farmers and manufacturers and our workers at a disadvantage. at the same time, we would like to work with you on the need to send a clear unmistakable message to russia. that we care deeply about rule of law in russia and care deeply about universal human rights and that russians have every reason to expect their government to protect their human rights. i would like to affirmatively offer the opportunity to work together. i think we can do both. i don't think it's either or. i believe we should lift them

and i believe we should send a message about the concern about human rights in russia. >> i look forward to working with you and i think we do both. i know many members agree on that. let me talk about the amendment that we were responsible for including in the dodd frank legislation from extractive industries in which you were helpful in supporting that effort and having it included in the dodd frank provisions. i would ask if you could perhaps share with us how you see that playing internationally. that is important for investors to have transparency, but it also leads to stability of governments that are critically important to u.s. interest. the international community is looking at the united states and sees the leadership here and

wondering if you can share how you think this will be effective internationally. the leadership on transparency of the mineral companies so that the wealth goes to the people rather than to fund corruption. >> first, i want to commend you and the senator for including the principals and the disclosure requirements in dodd frank. we know and see it every day how development of natural resources has fuelled corruption and mismanagement and the so-called oil curse or resource curse and it upheeds brought cased economic growth. you set a standard for transparency and we are working to make sure it is implemented effectively. we know that there challenges in

doing this. i hope the changes reflect the clear intent of the law, namely to require all relevant companies operating in the sector to disclose the payments they make to foreign governments. i think everybody is benefitted by the disinfectant of sunshine and the spotlight to hold institutions accountable. the section 1504 which is what the sec is prom you willigating rules on has rules of transparenciy that we are committed to. i hear from people who are concerned about whether the sec is going to go far enough in our system. they have the responsibility for doing it and we encourage them to go as far as possible because the eu is considering provisions

similar to section 1504 because we passed 1504. we are working at state on a program called the energy governance and capacity initiative which is trying to encourage governments to manage their oil and gas and mineral sector responsibly. we have a good start here. we even have an eiti multidonor trust fund to help implement it. i think our own government, all aspects should be as forward-leaning as possible to what the intent was behind the legislation of what you proposed and passed. >> thank you, madam secretary. in regards to alan gross and cuba, we appreciate that we are looking to getting him released. thank you.

>> thank you very much. >> madam secretary, thank you for being here today. i think you earned a well-deserved respect on both sides of the aisle the way you worked with all of us on both sides of the aisle and i thank you for that. i really do. i thank you for coming before a committee that doesn't do authorizing. you are preventing the budget and much of this is to the appropriations committee. there may be a few meetings regarding this, but it's nice of to you come up anyway. we won't impact that in any way. one of the things we did impact was a star treaty. we worked with them to work through the star treaty. i supported the star treaty and we worked closely with the office to make sure all of the compliments of the ty